Friends, I was out of blogging due to some personal reasons, inherited laziness ..etc.. J
In meanwhile I am about to complete the fantastic & challenging to read book "The Black Swan". So taking lesson from the book, I restrained myself to make a prediction rather I will talk more about consequences of an event. J
Now monetary policy is due on 29th Jan. Banks are saying that there will not be any change. But there is a case to tighten the monetary policy, FIIs are pumping money not only in equities but too in debt market in a big way. The reason is simple enough they are getting higher interest rate here plus by appreciating rupee will help them to make money too. So there is already plenty of liquidity in the system. There is going to be tough job for RBI what to do. CRR hike will suck out money from the system, but that in turn will raise the further interest rate that will not be a good news for the corporate world. As I am drafting this, NIFTY is already down 70 odd points. But no choice for RBI, neither for FIIs they are going to stay here no choices for them either.
At this juncture where inflation is all time high, economy is just recovering, plenty of money in the system and also they have to maintain the growth rate. RBI is in great dilemma but no choices left other than to tighten the monetary policy. rranjan27@gmail.com
